Club Med set to change hands, focus on China

NEW HORIZONS:The company has received a buyout bid by two of its shareholders, who want to spread to China as its bookings in Europe drop

The Guardian

ClubMed holiday brochures are displayed at a Chinese tourist agency in Beijing on June 15, 2010. The two main shareholders in the upmarket holiday group Club Mediterranee, including a Chinese firm, said on Monday that they would make a bid for the company, driving Club Med shares up 22.53 percent.

Photo: AFP

The Club Med holiday business may want to consider renaming itself Club South China Sea: The French firm is set to be bought out by Chinese and French investors who are targeting China for its future growth.

The company is hoping to break into the Chinese holiday market and aims to make the country its second-largest customer base within three years.

Club Med, which has traditionally focused its business in Europe and North Africa, said the approach was “friendly.”

“The board took note of the friendly character of this offer. The board will meet again after the delivery of the report by the independent expert to provide its reasoned opinion on the terms of the tender offer,” it said.

STRATEGY

A joint statement from Axa and Fosun said they wanted to “implement a strategy in line with the difficult environment of the tourism market in Europe, in particular in France.”

“An acceleration of the development strategy in the emerging countries as well as the strengthening of the market shares in mature markets are necessary,” the statement said.

Henri Giscard d’Estaing, Club Med’s chief executive and son of former French president Valery Giscard d’Estaing, would remain in charge under the terms of the offer.

He joined the company in 2002 and turned around its loss-making position after the business suffered from an ill-advised foray into the services sector, away from its traditional upmarket holiday villages.

Fosun and Axa have 10 percent and 9 percent stakes respectively, and Fosun could play a pivotal role in Club Med’s expansion into China, where it launched its first resort in 2010.

Club Med said revenues at its holiday villages in the six months to the end of last month fell 6.4 percent, with bookings in Europe over the past eight weeks down 4.6 percent, owing to the weak French market. However, Asian bookings jumped 13.9 percent.

CHINA

The burgeoning Chinese middle class is becoming more demanding and overseas visits have topped 83 million, with spending of US$102 billion, overtaking Germany and the US to become the world’s largest outbound tourism market, according to Chinese authorities.

Chinese tourists tend to travel to Hong Kong, Taiwan and Macau — where they can gamble legally — but have started to look further afield.

According to Thailand’s tourism authority, Chinese tourist numbers jumped 93 percent to 1.1 million in the first three months of this year, and the country beat Hong Kong to the top spot for overseas visits for the first time.

Chinese tourists are also particularly fond of French fashion brands including Dior, Louis Vuitton and Chanel, spending ￡3,500 (US$5,280) per trip, according to China Confidential.

Club Med pioneered the all-inclusive holiday resort in the 1950s and 1960s, but has recently struggled amid the economic downturn in Europe.

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